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Senior Thames Water executives will receive a gorgeous “retention incentive” as part of a £3 billion emergency loan agreed by a utility seeking to stem religion.
Some executives were in line with “50% of their salary, a very large bonus” as part of the loan agreed with creditors, including US hedge fund Elliot Management and Silver Point Capital.
Montague argued that Thames Water must pay a bonus to prevent rivals from “driving away” their best employees.
“We have a bonus scheme to protect our most valuable resources, a senior management team,” Montague told the Cross-Party Environment Selection Committee.
The bonus will be paid in three tranches in addition to annual salary and other awards, MP reported.
Montague, a veteran city in London, admitted it was a rare deal. “This was the first time I’ve encountered this and I’ve done some restructuring in my time,” he said. “This team needs to stay.”
Former UK gas executive Chris Weston was appointed CEO of Thames Water in December 2023 and was criticised for getting a bonus of £195,000 for his first three months at work. He is on a gross wage package of £2.3 million a year.
The government’s Environment Bureau said after Tuesday’s hearing:
“The government hasn’t said it anymore. Under the water law, we will no longer be paid a million pound bonus this year.”
The Select Committee hearing is that Thames Water, the UK’s largest water operator, is trying to dodge religion under the government’s special administrative system. The company, which serves about a quarter of the country’s population, is struggling with the weight of its 20 billion pound debt mountain and has exclusive discussions with private equity firm KKR to take over its business.
A £3 billion creditor loan (chased in court by a rival bondholder) costs 9.75% interest and fees. However, Montague argued that the company must agree to the transaction as Thames Water’s “hair lift” financial crisis means that the UK’s biggest water operators have sometimes remained in the past year.
“Last year, Thames has come very close to having completely exhausted their money. Over the past year, there has been five weeks of liquidity.
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Montague defended the agreement that granted KKR an exclusive right to the transaction despite Thames Water receiving five other bids. “KKR bids were technically and financially far apart in terms of commitment to providing fairness. They were ahead,” he said.
He added that he expects many of the boards to resign if a £4 billion KKR deal is confirmed.
“It’s ridiculous that while Thames’ water accumulates seemingly exponential debt, they’re choosing to give huge bonuses,” said Tim Fallon, a liberal Democratic spokesman for environmental, food and rural issues.
